Crown Crafts Q1 2027 Earnings Report

Crown Crafts EPS Results

• Actual EPS: $0.19
• Consensus EPS: $0.14
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Crown Crafts Revenue Results

• Actual Revenue: $16.77 million
• Expected Revenue: $20.90 million
• Beat/Miss: Missed by -$4.13 million
• YoY Revenue Growth: N/A

Crown Crafts Announcement Details

• Quarter: Q1 2027
• Date: 8/12/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 12, 2026
• Conference Call Time: 5:00PM ET

Crown Crafts (NASDAQ:CRWS) (NASDAQ: CRWS) is a U.S.-based designer, marketer and distributor of infant, toddler and juvenile consumer products. The company develops a wide range of softlines and related accessories, including crib and toddler bedding, blankets, decorative pillows, bath towels and washcloths. Since its founding in 1957, Crown Crafts has focused on combining creative design with functional quality to meet the shifting preferences of young families and caregivers.

The company operates two primary business segments. Its Domestic Products segment encompasses the design, sourcing and marketing of finished goods under proprietary and private labels for major mass merchants, online retailers and specialty stores in North America. Key product lines include crib and toddler bedding sets, nursery décor items and infant bath linens. The International Sourcing segment manages relationships with offshore manufacturers—primarily in Asia—to procure fabrics and finished products that are then sold into the domestic market. This dual‐segment structure allows Crown Crafts to balance creative control with global cost efficiencies.

Crown Crafts markets its products under a variety of brand names, including Crown Crafts Baby, NoJo and Lambs & Ivy, and supplies a broad retail network that includes department stores, warehouse clubs and e-commerce platforms. The company’s headquarters is located in Gonzales, Louisiana, and it maintains a field sales organization to support key customers in the United States and Canada. Crown Crafts also collaborates with international retail partners, leveraging its sourcing capabilities to serve markets beyond North America.

Over more than six decades of operations, Crown Crafts has evolved from a regional textile concern into a specialized juvenile-products provider. The company’s senior leadership team is focused on product innovation, supply‐chain management and strategic partnerships to drive long‐term growth. By blending creative design with sourcing expertise, Crown Crafts aims to deliver durable, attractive and affordable nursery and infant care essentials to families worldwide.

Crown Crafts Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Sales rose 8% to $16.8 million, while adjusted gross margin expanded 290 basis points to 25.6% as improved inventory availability, pricing initiatives, and a favorable product mix helped offset soft consumer demand.
• Positive Sentiment: The company returned to profitability, reporting GAAP net income of $2.1 million, or $0.19 per share, versus a $1.1 million loss a year earlier, and generated $5.5 million in operating cash flow.
• Positive Sentiment: Crown Crafts reduced debt from more than $14 million to $9.6 million during the quarter, with total liquidity of $12.1 million, strengthening its balance sheet for future growth investments.
• Positive Sentiment: The relaunch of Groovy Girls has exceeded expectations, particularly in Canada, where demand has required inventory to be redirected from the U.S.; a partial Amazon launch is targeted for October and Germany distribution is planned for September.
• Negative Sentiment: The board reduced the quarterly dividend to approximately a 4% yield to retain more cash for debt repayment and growth initiatives, while about $900,000 of requested tariff reimbursements remains unreceived and unbooked.

Presentation

[Operator]

Good afternoon, everyone, and welcome to the Crown Crafts Fiscal Year 2027 Q1 Conference Call. During today's call, the company may make certain forward-looking statements, and actual results may differ materially from those expressed or implied. These statements are subject to risks and uncertainties that may be beyond Crown Crafts' control, and the company is under no obligation to update these statements.

[Operator]

For more information about the company's risk factors and other uncertainties, please refer to the company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K. With that, I would now like to turn the call over to President and Chief Executive Officer, Olivia Elliott. Please go ahead.

[Olivia Elliott, President and CEO at Crown Crafts]

Thank you, operator, and thank you everyone for joining this afternoon's call. Today after the close, Crown Crafts reported very solid quarterly results given the still soft demand environment. We accomplished this by focusing on what we can control, and our team did a terrific job executing on our strategy.

[Olivia Elliott, President and CEO at Crown Crafts]

We were able to grow our net sales 8%, despite the uncertainty that consumers continue to feel around high interest rates, inflation, and global geopolitical events. Improved inventory levels account for most of the growth, as we were able to better meet demand than during last year's tariff instability. Just as important, we were able to drive a higher gross margin, both on a GAAP basis and also when adjusting for tariff refunds, as Claire will walk us through in a moment.

[Olivia Elliott, President and CEO at Crown Crafts]

On an adjusted basis, our gross margin for the quarter climbed nearly three full percentage points year over year to 25.6%. As a result, we were able to produce positive net income versus the loss reported in the prior year period, and we once again generated positive operating cash flow of nearly $5 million, similar to the March quarter. Combined with a significant reduction in our debt balance during the quarter, our balance sheet is significantly strengthened.

[Olivia Elliott, President and CEO at Crown Crafts]

As we mentioned on our last call, during the June quarter, we relaunched Manhattan Toy Brands' Groovy Girls. I'm pleased to say that so far, sales of this iconic line of fashion dolls has exceeded our expectations, largely driven by the Canadian market. We believe this bodes well for continued success of this retro-inspired beloved brand.

[Olivia Elliott, President and CEO at Crown Crafts]

Next, I'll provide an update on our strategic initiatives to grow both our top and bottom line. A top priority is our ongoing innovative internal product development to expand our product offerings. Another initiative is to build on our recent margin expansion to further drive profitability. From moving towards a favorable mix of higher margin products and of course, our relentless spending discipline.

[Olivia Elliott, President and CEO at Crown Crafts]

We're also striving to consolidate certain internal operations for greater efficiency, reduce our debt levels, and over the next two years, we'll be working on warehouse consolidation to further enhance our operating structure.These initiatives to create long-term value can often require upfront investment. To that end, our board has elected to rightsize our quarterly dividend, which will provide us strategic access to a greater portion of our cash flow that will also allow us to pay down debt and build the balance sheet strength that will support Crown Crafts' growth well into the future.

[Olivia Elliott, President and CEO at Crown Crafts]

In essence, our new quarterly dividend allows for a well-balanced capital allocation approach that includes investing in growth initiatives and maintaining a solid balance sheet while still rewarding our valued shareholders with what is now approximately a 4% attractive dividend yield. In closing, we had a solid quarter as we continue to execute on our business plan.

[Olivia Elliott, President and CEO at Crown Crafts]

While leveraging our inherent strengths, including our brands, our licenses, and our valued retail and licensing partners, our multi-pronged strategy that covers internal development of new products, reinvigorated marketing efforts, tight cost controls, and the strategic allocation of capital positions us well for the creation of long-term shareholder value. Now I'll turn it over to Claire to provide additional details around our quarterly results before we take your questions.

[Claire Spencer, VP and CFO at Crown Crafts]

Thank you, Olivia, and welcome everyone once again to the call. Our Q1 net sales of $16.8 million were up 8% over the prior quarter as improved inventory levels helped us capitalize on still soft consumer spending. As Olivia mentioned, we had strong gross margin performance. During the quarter, tariff refunds reduced our cost of products sold by $3.7 million.

[Claire Spencer, VP and CFO at Crown Crafts]

Even adjusting for this benefit, our gross profit of $4.3 million was above the prior year's $3.5 million and equates to a gross profit margin of 25.6%, which was up 290 basis points year-over-year. This expansion of our adjusted gross margin reflects both our strategic pricing initiatives and an increasingly favorable mix of higher margin products. We recorded marketing and administrative expense of $5.2 million for the Q1 as compared to $4.7 million a year earlier.

[Claire Spencer, VP and CFO at Crown Crafts]

Although this quarter's figure includes just over $500,000 of accrued incentive and compensation associated with tariff refunds. On a normalized basis, we reduced marketing and administrative expense as a percent of net sales to 28% versus 30.5% in the Q1 of fiscal 2026, which speaks to our sharp focus on cost efficiencies as Olivia mentioned.

[Claire Spencer, VP and CFO at Crown Crafts]

Moving down the income statement, we also successfully reduced net interest expense to only $190,000, well below the year ago $283,000 as a result of our efforts to reduce debt over the past year. From a GAAP perspective, we reported net income of $2.1 million, or $0.19 per share, well above the prior year loss of $1.1 million, or $0.10 per share.

[Claire Spencer, VP and CFO at Crown Crafts]

While Q1 net income benefited from the tariff-related adjustments described, I'll again note that on an adjusted basis, we still generated a Q1 profit versus the prior year quarter's net loss. Turning to our balance sheet, as of June 28th, we had total liquidity of $12.1 million, including cash and equivalents and availability on our revolving line of credit. During the Q1, we significantly reduced our debt from more than $14 million at the start of the fiscal year to just $9.6 million at the end of the quarter.

[Claire Spencer, VP and CFO at Crown Crafts]

Not only did we reduce outstanding debt, but our net cash from operating activities of $5.5 million served to further support our balance sheet strength, putting us in a strong position to capitalize on future growth opportunities in a disciplined manner. In summary, this was another quarter of strong execution in which we focused on what we can control while economic conditions remain soft.

[Claire Spencer, VP and CFO at Crown Crafts]

Even adjusted for tariff refunds, we grew revenues, expanded our gross margin, and generated stronger earnings per share than in the year-ago quarter. We also further strengthened our balance sheet and are well positioned to make progress against our strategic initiatives as we move through the new fiscal year. Now, operator, if you could please open the lines, Olivia and I would be happy to take questions.

[Operator]

Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Again, that is star one if you would like to ask a question. Our first question will come from Doug Ruth with Lenox Financial Services.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Olivia and Claire, congratulations. Fabulous report. I have several questions, so if you feel like I am asking too many, I do not mind getting back in the queue. Could you offer some commentary of what you think is happening with Groovy Girls?

[Olivia Elliott, President and CEO at Crown Crafts]

Groovy Girls has done phenomenally well in Canada. As we look back on history, even before we acquired Manhattan Toy, the first time they launched Groovy Girls, it appears that it took off in Canada first then as well. We have actually sold so much in Canada at this point in time that we're having to divert inventory that should be coming to the U.S. to go to Canada. We're really excited about the opportunity there. Then we'll be launching Groovy Girls at K&J in Germany for the European market in September.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Is there a theory of why the Canadians like Groovy Girls so much?

[Olivia Elliott, President and CEO at Crown Crafts]

We don't know. I can tell you that our distributor there partnered with Indigo Books & Music, who really put some marketing efforts behind it, and they hosted an event, so that probably helped with it, to have such a large partner to launch with.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. You had previously mentioned that ultimately the Groovy Girls will be on Amazon. Is there a date that that might happen?

[Olivia Elliott, President and CEO at Crown Crafts]

We are still hoping to launch early fall. The inventory, having it take off faster than we expected, it may not be the full line, but we're still targeting October sometime with at least part of a line.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. Very good. Could you explain to us what the status is of the tariff money? I think you had told us there was maybe around $5 million, maybe $5.5 million. Are you expecting more money, or do you think that's it, or?

[Olivia Elliott, President and CEO at Crown Crafts]

We're hoping to get more money. We had requested reimbursement for $5.6 million to $5.7 million in tariffs, and so far, we've received about $4.7 million. That is the portion that we booked. Most of that was received in July. A very small portion had been received in the Q1. There's about $900,000 that we still haven't received, and we have not booked.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. How has the balance sheet changed? Are you able to tell us anything about where the balance sheet is now versus where it was based on maybe tariff money?

[Olivia Elliott, President and CEO at Crown Crafts]

You mean as of today versus the quarter end?

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Yes.

[Olivia Elliott, President and CEO at Crown Crafts]

It certainly improved by getting $4+ million in cash in in the month of July, but that's about all we can really tell you.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Oh, okay. I didn't realize the $4 million came in in July. Okay, very good.

[Olivia Elliott, President and CEO at Crown Crafts]

Yeah. So it was booked as other current assets as opposed to a trade receivable at quarter end.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

I see. So that's the other current asset that's on the balance sheet.

[Olivia Elliott, President and CEO at Crown Crafts]

Yeah, and I think there's more information Claire just pointed out in Footnote 4.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Footnote 4. Okay, good. What can you tell us about the warehouse?

[Olivia Elliott, President and CEO at Crown Crafts]

We'll be starting that project sometime in late fall or early winter. It's about an 18-month process, and the plan is to consolidate sometime in May of 2028. So that process is not quite started yet.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. Can you provide any additional details about capital expenditures and what you're thinking and how much you might be spending?

[Olivia Elliott, President and CEO at Crown Crafts]

As of right now, our capital expenditures should just be the normal capital expenditures, which is mainly IT. So it would be any ERP upgrades that we're going through right now, molds for plastic toys. Anything for the warehouse is unlikely to be spent in this fiscal year. It will probably start sometime in the next fiscal year.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. All right. How about the international sales are doing so well, can you share anything that's happening and why they're doing so well or what you're doing and that kind of stuff?

[Olivia Elliott, President and CEO at Crown Crafts]

Well, a lot of that's Groovy Girls in Canada, but it's more than that in Canada as well. We had two different distributors in Canada previously, and starting in this calendar year, maybe a little bit in December of 2025, we got a new distributor that is handling both the Manhattan Toy and Sassy product lines and taking that to all channels.

[Olivia Elliott, President and CEO at Crown Crafts]

So we've seen a pretty good improvement there across the board. Groovy Girls certainly added to it. When we went to K&J last fall, we did pick up some new distributors that started buying product maybe later in the fall, early winter. So a little bit in Europe, a little improvement as well.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. What can you tell us about LEGOLAND? We know we got that big, new facility, or I Gguess it's a year old now, in Shanghai. What's happening with LEGOLAND?

[Olivia Elliott, President and CEO at Crown Crafts]

I don't think there's been any changes with LEGOLAND. That was the last new park of any size. A lot of the parks for LEGOLAND actually start winding down and closing for the winter. There are some that are open. I know like Florida and California stay open year-round, but a lot of them close maybe sometime in October. Those are more seasonal sales than year-round.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. How about the Manhattan Toy office in Minnesota, is there any thoughts or updates on that at all?

[Olivia Elliott, President and CEO at Crown Crafts]

That lease expires at the end of March next year. We'll obviously not renew that lease. We're still kind of thinking about what we need, if anything at all, in Minneapolis, if we do get a lease. There's two trains of thought there. It's a very small staff, so they can either work from home full time or we may need some small lease that can just hold a few people and like a photography studio. But we will not be renewing the very expensive lease that we're in right now.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. My last question, is there any new thoughts or ideas on diaper bags and how the company might proceed with that business?

[Olivia Elliott, President and CEO at Crown Crafts]

We're still working on that product line. We did just start selling the new Motherhood diaper bags. Very slow start at this point in time. It's only on Amazon. We're working on that. Then we have a couple of NoJo bags, NoJo branded, one of which is in Walmart, but that's really it right now. We haven't given up on diaper bags. We're just still working on it.

[Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services]

Okay. You just did a fabulous job, and thank you for what you did on behalf of the shareholders.

[Olivia Elliott, President and CEO at Crown Crafts]

Thank you.

[Operator]

This now concludes our question-and-answer session. I would like to turn the floor back over to Olivia Elliott for closing comments.

[Olivia Elliott, President and CEO at Crown Crafts]

Thank you, operator. Again, we appreciate everyone being on the call. We look forward to building on the early success of Groovy Girls and our other innovative products on the way. We appreciate your continued interest in Crown Crafts, and we will keep you posted on our progress as we move through the new fiscal year. Please feel free to reach out with any additional questions, and thanks again for being with us.

[Operator]

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Participants

Executives

• Olivia Elliott, President and CEO
• Claire Spencer, VP and CFO

Analysts

• Doug Ruth, Owner, President, and Chief Compliance Officer at Lenox Financial Services